Workers in the United States have a strong tendency to move around quickly, and at a large cost to employers. In 2016, 47% of workers admitted to replacing more than 20% of their employees throughout one calendar year and reports determined millennial turnover cost companies $30.5 billion collectively each year. Low employee retention rates in the United States are not only costly to businesses but also heavily influence the way a company operates and it is perceived by the public long term.
Why Does Employee Retention Matter?
Employee retention is notably important to employers conceivably due to its ability to cut costs. The numbers speak for themselves and essentially it will cost an employer twice the amount of one employee’s salary to hire and train a replacement. In addition, the cost of hiring isn’t limited to the salary, but it also drains human resources to headhunt, interview, onboard, and finally train an employee for a new position.
As it is more expensive to hire, onboard and train a new employee, it causes consistency within a company to falter. New hires usually entail months of training within their new roles, getting accustomed to company culture and becoming comfortable in their new positions. These employees could also eventually end up training newer hires which will further impact how the company operates.
While it takes time to learn the culture of a new company, it is another thing entirely to promote the culture accurately. Like a game of telephone, as the process of passing something on gets longer, the more it changes. So, retaining employees for as long as possible is the safest way to ensure a company’s brand is intact and being represented properly.
How do You Create Employee Retention?
The easiest way to prevent employees from wanting to leave a company is to improve the process at the source: who companies hire and how. Focusing on applicants who are excited about the prospective job and seem genuinely interested in being a part of the company is an important objective when conducting interviews because those applicants are the ones who are more likely to want to stay with the business long-term.
But how they are hired is also essential. A Gallup study found only 12% of employees found their company onboarding process good. The lack of a good onboarding process has been reported to result in feelings of disengagement within 3 months, which prevents the formation of an emotional bond between the employee and the company — this connection can make or break retention. A positive hiring environment is beneficial to all parties involved; the employer knows they will have a committed employee and the employee will be enthusiastic about their work environment.
New hires want to know they will be happy in their workplace and to know the organization stands for the same ideals they do. Studies have shown millennials are 25 times more likely to stay long-term at a workplace they believe in, which in turn minimizes company turnover costs. For example, 71% of millennials who strongly believe they know what their organization stands for and what makes it different from its competitors say they plan to be with their company for at least one year. This suggests a positive company culture in which employees find valuable aids employee retention for at least the first year.
Training and Advancement
In any industry, people want the opportunity for advancement within their career. The intelligent manager will invest time in supporting their employees to realize their short-term and long-term goals. For example, creating the opportunity to attend workshops, up-skilling courses or relevant industry events. Failure could be perceived as a lack of care for their employees, which can dampen morale.
A communicative and collaborative process, structured to inform, empower and recognize employees and their work contributions are crucial. Communication that is top-down, bottom-up and also lateral engages the community and provides management with a shared insight into the ‘health’ of the business.
In combination, these elements can provide businesses with a retention strategy built from a genuine commitment to serving your customers and employees.
It’s your turn
It’s pretty clear many business owners have trouble retaining their employees. Having more insight into how to empower your employees and keep them will allow you to reach lengths in your business you never thought were possible. However, unless you actually adopt these tips mentioned above, you will fall into the 47% of business owners who need to replace their employees in their first year.